Food shortages and rising prices continue to plague the Philippines. 6.4% Philippines inflation hits 9-yr high. The Manila Standard reports that the rate of inflation in August catapulted from 5.7 percent in July
6.4% Philippines Inflation Hits 9-yr High
Spiraling prices of rice, fish and other food products were the main culprits. That’s according to figures released from the Philippine Statistics Authority, PSA. Data from the PSA showed that the August inflation was the fastest in more than nine years, or since it hit 6.6 percent in March 2009.
An article in The Manila Times states that the PSA reported the biggest increases in food and non-alcoholic beverages at 8.5 percent. Alcoholic beverages and tobacco increased at a whopping 21.6 percent.
Slower price hikes were recorded in furnishing, household equipment and routine maintenance of the house at 3.5 %.
Health and restaurant and miscellaneous goods and services finished at 4 %.
Recreation and culture were at 2.4% in August.
However, clothing and footwear remained at the previous month’s annual growth rate of 2.4 percent.
Steamrolled by new TRAIN law?
The following chart shows the monthly increase in inflation since the beginning of 2018. Some claim the increase in prices are due to the TRAIN Law which was implemented in January. The Tax Reform for Acceleration and Inclusion (TRAIN) is a tax reform program envisioned by President Duterte.
The TRAIN Law imposes higher excise taxes on fuel products, cars, tobacco, and sugar-sweetened beverages.
Meanwhile, existing “sin taxes” on tobacco and alcoholic beverages rose further this year and contributed greatly to pushing up the overall pace of inflation.
JC Punongbayan over at Rappler.com opined that TRAIN’s contribution to the acceleration of prices is threefold:
- First, it directly increased the prices of certain products – like petroleum, automobiles, and sugar-sweetened beverages – owing to its new excise taxes.
- Second, the impact of these new excise taxes has rippled across the economy, raising inflation across the board.
- Third, opportunistic businessmen have used TRAIN as an excuse to charge unwarranted price increases and reap above-normal profits.
Or Steamrolled by Profiteers?
JC states in his opinion piece that profiteering could be a major contributor to the surging inflation. He asks:
- How many businesses are abusing TRAIN to charge unwarranted price hikes?
- What mechanisms are in place to monitor prices and ensure that profiteers are caught and charged accordingly?
- Is government going after these profiteers hard enough?
The Central Bank Weighs In
Bangko Sentral ng Pilipinas, BSP, Governor Nestor Espenilla stated that “Elevated oil prices also continue to impact transport and power prices. At the same time, the peso is being adversely affected by emerging market uncertainties and a strong US dollar.”
The BSP is the central bank of the Philippines akin to the United States Federal Reserve and sets the monetary policy of the PH.
The Philippine peso hit a fresh 12-year low of P53.55 against the U.S. dollar on Wednesday. It was the peso’s weakest close since a P53.57:$1 finish on June 28, 2006.
Espenilla also said that “However, it is equally apparent that strong domestic demand is making it too convenient for producers and traders to pass on higher costs and possibly more to consumers.”
Average inflation in the first eight months is now 4.73 percent, beyond the government’s official target range of 2 percent to 4 percent for the year.
Price of Rice Surges
The country’s total rice stocks inventory of the National Food Authority (NFA) further declined to 1.9 million metric tons as of Aug. 10, 2018. This was around 15 percent lower than the levels in the previous month.
Like the vast majority of Filipino households, our family eats their share of rice. However, when my asawa tries to buy the cheaper NFA white rice in Guimaras, our home province, at 27 pesos per kilo, it’s not always available.
When the NFA rice is available, however, each customer is limited to a purchase of five kilos and must sign a document verifying their purchase. Nevertheless, individual family members may also purchase five kilos, also.
We use white rice for our eight puppies. The canines have sardines, or cheap cuts of chicken or pork to go with their rice. Our family eats red rice.
For a 50-kilo sack of red rice my wife used to pay 2,300 pesos, 46 pesos a kilo. Now she pays 2,650 pesos for the same 50-kilo sack, 53 pesos a kilo.
Rice? I can live without it. I’m a meat-and-potatoes guy from the Midwest.
However, an average Filipino’s consumption can be up to three-fourths (75 percent) rice and one-fourth (25 percent) other food groups. That’s equivalent to five cups of rice per person a day for every Filipino according to an article from the Inquirer.net.
Nevertheless, maybe I should take a cue from Budget chief Benjamin Diokno.
Back in May, Diokno said …”I think we should be less of a crybaby.”
OK, Mr. Secretary. I’ll try.
Photo credit: mom.girlstalkinsmack.com